What does Ponzi scheme mean?

Ponzi scheme is the name of investment fraud in the financial field and the originator of pyramid schemes. In short, it is to use the money of new investors to pay interest and short-term returns to old investors, so as to create the illusion of making money and then defraud more investment.

Ponzi scheme was invented by a speculator named Charles Ponzi. 19 19 He planned a scam to let people invest in a nonexistent enterprise, promising investors a 40% profit return within three months. Due to the rich return on the previous investment, Ponzi successfully attracted 30,000 investors within seven months. The plot lasted for a year, and only those who were carried away by interests came to their senses.

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Basic characteristics of Ponzi scheme

1, low risk and high return anti-investment law

Liars often attract investors who don't know the truth with higher returns, but never emphasize the risk factors of investment.

2. The characteristics of funds for robbing Peter to pay Paul.

Because the promised return on investment cannot be realized at all, the return on investment for old customers can only be realized by joining new customers or other financing arrangements. This puts high demands on the capital flow of Ponzi scheme. Therefore, scammers always try their best to expand the scope of customers and broaden the scale of absorbing funds in order to get enough funds to make up for the space.

3. The countercyclical characteristics of investment.

The investment projects of Ponzi scheme never seem to be affected by the investment cycle. Whether it is industrial investment related to production or financial investment related to market conditions, investment projects always seem to make a steady profit.

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